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New York’s Council Members Lancman and Rosenthal Introduce Legislation Prohibiting Employers from Requiring Low-Wage Employees to Enter Non-Competes

AUGUST 18, 2017

New York City Councilman Members Rory I. Lancman and Helen K. Rosenthal introduced legislation to prohibit employers from requiring low-wage employees to enter into non-competes as a condition of employment. In its current version, Introduction No. 1663 provides, “No employer shall enter into a covenant not to compete with any low-wage employee of such employer.” The draft defines a covenant not to compete as an agreement between the employer and employee which restricts the employee from: (1) working for an employer who is not a party to the agreement for a specified period of time; (2) working in a specified geographical area for an employer not a party to the agreement; and (3) working for an employer who is not a party to the agreement, without regard to whether the restriction is for a specified period of time, if the employee performs similar work for the employers. Further, the bill defines “low-wage employee[s]” as all employees except manual workers (mechanics, workingmen, or laborers), railroad workers, commission salesmen, and executive, administrative, or professional personnel who earn more than $900 per week.

The proposed legislation also prohibits an employer from imposing a non-compete provision on a potential employee other than a “low wage employee,” unless, at the beginning of the hiring process, the employer disclosed in writing that the employee may be subject to such a covenant. The proposed measure is significant because, generally, courts allow employers to impose covenants not to compete mid-employment and view an employee’s continued employment as adequate consideration for the restriction.

Introduction No. 1663 is the most recent of several efforts by New York City to strengthen the rights of its employees. Earlier this year, the New York City Council approved a bill that prohibits employers from inquiring about the salary history of prospective employees, to stop the perpetuation of wage gaps between male and female hires. In 2016, the Achieve Pay Equity Act went into effect in the State of New York, which restricts an employer’s ability to prohibit employees from “inquiring about, discussing, or disclosing the wages of such employee or another employee.”

The complete language of Introduction No. 1663 may be accessed by clicking here.